Recklessness Not Well Regarded By Shareholders

Michael Hedges April 19, 2023 Follow on Twitter

A scandal or two can rock famous people. Fans just might not understand. Many years ago popular US televangelist Jimmy Swaggart, caught with a hooker, took to the TV airwaves with an appeal, perhaps to his flock, perhaps more, with tears in his eyes. "I have sinned against You, my Lord," he pleaded. "And I beg your forgiveness." Three years later there was another hooker.

Journalists dutifully assembled this week at the small courtroom in Delaware. The civil defamation lawsuit brought by Dominion Voting Systems against Fox News, subsidiary of Fox Corporation, principally owned by the Murdoch family, was finally headed to a jury trial. Dominion sought legal redress for damages to its reputation and business from reports broadcast on Fox News claiming the voting technology company had distorted results of the 2020 US presidential election to the detriment of candidate Donald Trump. More than a few in that courtroom were professionally - even personally - invested in bringing truth to bare. Recounts proved there was no false data. Donald Trump lost.

The legal process played out over two years. Dominion Voting Systems filed the lawsuits in March 2021 against Fox News Networks, several executives, employees and persons who appeared on the channel to proclaim various conspiracy theories asking US$1.6 billion for damages. During intervening months both claimant and defendant released statements and responses. Pre-trail depositions were collected and put into the public domain. Delaware Superior Court judge Eric Davis set a date for jury selection to proceed a trial.

Judge Davis issued a summary judgement in March finding that it was “crystal clear” that none of the statements about Dominion made on Fox News programs were factual. This clearly ended the possibility of his dismissing the lawsuit. Dominion would need to prove “actual malice” by Fox News. Actual malice in US law was established by the US Supreme Court (New York Times v. Sullivan 1964) as defamation with “reckless disregard for the truth.”

Over this past weekend it became clear that Fox Corporation lawyers were on the edge of a settlement. Court hearings were postponed, Judge Davis saying little. Tuesday (April 18) arrived and jury selection went forward. Then, again, silence for three hours. When Judge Davis spoke it was to announce a settlement was at hand. He thanked the jurors for their service. Reporters in the courtroom gasp. Fox News Networks would pay Dominion Voting Services US$787.5 million. They would not broadcast an apology. Other details have not been disclosed.

Yes, it is a lot of money, the largest defamation settlement in the US ever. As of that date Fox Corporation had US$4.1 billion cash on hand, reported the New York Times (April 19). Of course, the defendants have libel insurance to cover part of the settlement. Some commentators with scant exposure to legal maneuvering promptly noted that the settlement was only half of the amount demanded in the initial Dominion filing. Make no mistake, it is a win for Dominion.

Fox News, its executives and star performers did dodge a giant bullet. None will be required to testify in open court for this case, avoiding that Jimmy Swaggart moment. The Elder Mr. Murdoch does not perform well in that venue, as evidenced in the 2012 UK Leveson Inquiry into the tabloid culture. Settlements for the phone hacking episodes, including the closure of News Of The World, cost the company about US$200 million, reported the Financial Times (March 24 2022).

There are, then, six other lawsuits filed by Dominion against right-wing TV channels Newsmax and One America News plus those filed against Overstock founder Patrick Byrne, My Pillow owner and Trump supporter Mike Lindell, former Trump lawyer Rudy Giuliani and “stop the steal” promoter attorney Sidney Powell. “We’re not done yet,” said Dominion lawyer Stephen Shackelford after the settlement was announced, quoted by CNBC (April 18). “We’ve got some other people who have some accountability coming toward them.”

Then comes early next year the US$2.7 billion defamation claim from Smartmatic, another voting systems provider. “Dominion’s litigation exposed some of the misconduct and damage caused by Fox’s disinformation campaign,” said Smartmatic attorney J. Erik Connolly in a statement. “Smartmatic will expose the rest. Smartmatic remains committed to clearing its name, recouping the significant damage done to the company, and holding Fox accountable for undermining democracy.”

The settlement “sent some of the (Fox) hosts over the edge,” said New York Times writer Jim Rutenberg to the BBC (April 19). Also on or perhaps over the edge are Fox Corporation shareholders. Under Delaware law they can be held liable for corporate misdeeds. Shareholders “are looking for records such as board minutes, emails and texts that may contain evidence that Fox directors and executives were derelict by allowing the network to air the false claims,” reported Reuters (April 17). Fox viewers, in their own bubble, have no idea, so far.

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• Hot Topics - News Corp/Fox Corp

• Hot Topics - Defamation Law